Australian (ASX) Stock Market Forum

HBRD - BetaShares Active Australian Hybrids Fund

Dona Ferentes

A little bit OC⚡DC
11 January 2016


Fund Objective​

HBRD aims to provide investors with attractive income returns from an actively managed, diversified portfolio of primarily hybrid securities.

Fund Strategy​

HBRD will invest in an actively managed portfolio of hybrid securities overseen by a professional investment manager. If the hybrids market is assessed to be overvalued or to present a heightened risk of capital loss, the Fund can allocate more of the portfolio to lower risk securities such as cash or bonds.

Invested in 34 hybrids/bonds at end of February 2022. Some 97% of the fund is in Preference Shares, with the remainder in Subordinated Bonds and Cash. Hybrids are securities that combine elements of bonds and shares. Their share-like features can provide a higher return than bonds, but they have higher risk and can be complicated.

Net Assets* ($A)$1,720,534,540
Units Outstanding* (#)168,986,833
Mgmt Costs** (% p.a.)0.55%
Distribution Frequency Monthly

Fund Returns After Fees (%)​

Since inception (p.a) (Nov 2017) Nett 3.76% Gross (incl franking) 4.70% Index 3.95%
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there are changes afoot;

DDO stands for Design and Distribution Obligations, and it means that certain financial products can only be sold by initial public offering or IPO to appropriate consumers. For bank hybrid IPOs, this means wholesale investors or retail investors who receive the appropriate level of financial advice. And assume there will be material negative consequences for issuers who breach the rules by issuing to inappropriate investors.

So how does this affect banks and hybrids?

From ASIC’s perspective, investors in hybrid IPOs have traditionally fallen into five categories:
  1. Wholesale investors
  2. Investors who receive a high level of financial advice
  3. Investors who receive a lower level of financial advice
  4. Investors who receive no financial advice or are unadvised
  5. Investors who apply after receiving a shareholder offer
The last three categories will most likely be deemed inappropriate under DDO guidelines.

At rollover of existing hybrids, those in 3-5 will not be able to elect to do so. Nor will they be able to buy in the IPO of new issuance. If a retail investor wants exposure to hybrids, they will only be able to buy an individual Preference Share on the secondary market once listed (with brokerage) or they could buy either a managed fund or ETF that offers a diverse and managed exposure to such products.
yes i saw that , it looks like they are excluding retail dabblers like me ( although i qualify as an 'institutional investor ' should i choose to bet big , thank you BSL management )

currently there is nothing attractive that catches my eye in this area

i will be avoiding ETF exposure in this area , i have found seriously intense research pays off when i find a likely target

i wonder if they will exclude trading on the ASX after being floated ( restricting them to off-market trading )

it will be very interesting to see how this affects the big banks in particular
That's a very big change, some people really like hybrids, restricting access is a bit silly.
yes i have bought them in the past and it was worth the extra research time

however Basel III changed several things including bank hybrids

although i don't have any currently ( only a trivial exposure via a LIC ) i was hoping to invest in them in the future when risk v. reward ratios were more attractive
As mentioned elsewhere: